Case Study On Goodwill Impairment Of Hoperun Software M&A UISFTECH

In order to realize the key role of Merger and Acquisition(M & A)in optimizing resource allocation and adjusting industrial layout,government has issued a series of policies to encourage and help enterprises to carry out M & A.Under the guidance of the policy,M & A is being implemented rapidly,the M & A market continues to develop,and the number and amount of M & A transactions are also increasing.Standardized M & A activities can help enterprises to accelerate transformation and upgrading,realize extension and expansion,and enhance comprehensive competitiveness.However,some public companies use M & A to raise the transaction price to create a false image for profit transmission.For the high goodwill generated by high valuation and high premium M & A,they carry out "financial cleaning" through the loopholes of the current impairment policy,which leads to huge risks in the current M & A market in our country.Once the listed companies withdraw large amount of goodwill impairment,it would not only bring great negative impact on their own business development,but also disrupt the normal order of the stock market and damage the vital interests of investors.At the beginning of the transaction,the valuation premium rate of the underlying assets in the M & A cases quoted in this paper is as high as 1012.08%,resulting in a huge goodwill of 1,893.91 million yuan.As soon as the target company is out of the performance commitment period,it makes the impairment of goodwill centralized,which leads to dramatic fluctuations in the company's financial data.The net profit has decreased by 670.72% year on year,resulting in the first loss of the company since it was listed.Moreover,the stock price of the company has declined by more than 20% in three consecutive trading days,resulting in heavy losses for investors.In view of the background aboved,this paper analyzes this case.First of all,by consulting and collating the domestic and foreign literature and materials about goodwill accounting measurement,we have a basic understanding of the nature of goodwill,the confirmation measurement and the method of impairment,which lays a theoretical foundation for the writing of this paper.Then it introduces the specific situation of the case,focusing on the situation of the two companies,the background and motivation of M & A,the generation and impairment process of goodwill,and the impact on the company's finance and stock price after impairment,so as to pave the way for the following analysis.Then is the case analysis of goodwill impairment,mainly from the initial recognition of goodwill,subsequent measurement and management factors throughout the M & A.The analysis thinks that before the M &A,the underlying assets have obvious single big customer dependence and large amount of bad debt risk of accounts receivable.But in this case,listed companies in order to find performance support still launch a high premium M & A,the final decline in performance and unable to recover accounts receivable of subcompany led to the impairment.Based on the analysis of the above reasons,the paper summarized some inspirations and suggestions at the end.For example,to standardize the M & A transaction behavior from the system level.Relevant departments should strengthen the supervision of information disclosure.At the same time,it calls for changing the current impairment policy,using the combination of systematic amortization and impairment test to carry out subsequent measurement of goodwill,so as to reduce the impairment risk and make the accounting measurement of goodwill more effective return to senses as soon as possible.